EU: should we stay or should we go? A VSD repairer's view

17 June, 2016

If the UK votes to leave the EU in the upcoming referendum, it could have far-reaching effects for SMEs operating in the VSD (variable-speed drive) repair and refurbishment industry. Jordan Griffin, technical director at Northern Drives & Controls, gives his personal view on the challenges that NDC and others could face.

Like most SMEs in the UK automation service or repair industries, NDC are no strangers to the legislative and regulatory requirements of trading within – and, indeed, outside – the EU. We’ve built up our international business by establishing a network of global distributors. Unsurprisingly, we found it much easier to grow our business in Europe than in other parts of the world, due mainly to the many similarities in technical, financial and legal standards that the UK shares with EU member states.

This legislation is often criticised as being bureaucratic red tape that imposes additional costs which smaller businesses, in particular, feel. Leave campaigners are looking to negotiate a free trade agreement with the EU, which could help to remove some of that red tape, a move which would be welcomed by many SMEs. However, all companies that enjoy the free trade area must comply with the same standards and costs so, in actual fact, there is a level playing field.

EU legislation has greatly helped in harmonising standards across the EU and has allowed companies such as NDC to sell their products and services to EU countries knowing that they will meet all current regulations. In fact, we have experienced considerably more red tape when exporting to countries outside of the EU.

STRENGTH OF RELATIONSHIPS

Uncertainty will be the most likely immediate effect if Britain votes to leave the EU. And that uncertainty is sure to have an impact on UK growth and investment which will, in turn, affect UK industry. While we may have the opportunity to trade more freely with other economic areas – which should be an advantage to UK exporters – it’s hard to imagine that this would compensate the UK for any significant loss of EU trade in the short-to-medium term.

Like other UK engineering businesses, NDC is affected by the skills shortage. The company finds it easier to recruit skilled personnel from within the EU, than outside.

Today, NDC's exports outside of the EU account for less than 10% of our business. In the future, like many other UK exporters, we would hope to increase trade outside of the EU, but this continues to depend on reaching free trade agreements with other large trading blocs. Less-developed economies offer the prospect of potentially huge growth for export, and improved relationships with these countries could be hugely beneficial to the UK. Outside of the EU, we would be amongst a handful of Western economies that could gain full access to these markets.

Longer term, it’s hard to say what the effects of a UK exit could be on the VSD repair industry. Throughout the development of the automation industry, Britain has been a member of the European Union and the country is full of European-manufactured automation products. UK exporters have also worked hard to develop strong relationships within the EU. If we were to shift focus from the EU and replace these relationships with perhaps the Chinese or Brazilians, it will obviously take a lot of time and resources to get us back to the position we’re in today within Europe.